Helping hands

Helping hands

Your friendly neighbourhood financial adviser could soon become more informed about the financial products that meet your requirements. The Financial Advisors Association of India or Faaida—a new body representing the small individual financial advisers (IFAs)—has launched an initiative to unite, educate, train and empower financial advisers to not just sell, but also actually offer advice on financial products and match the services offered by large financial organizations such as a bank.

That’s good news for those who do not depend on relationship or wealth managers in banks, where the scale of operation is large and the investment advice, professional. However, advisers at banks could change frequently and the customer may end up dealing with different people on financial matters. What’s on offer from an IFA is long-term relationship and that personal touch. Operating out of small offices or homes, such advisers meet you at your convenience, help you with the application forms, and sometimes, even deposit your cheques.

Value-added service

Faaida is aiming to make advisers more professional. Formed by about 150 advisers not associated with any financial services distribution company, the association comes even as stock market regulator Securities and Exchange Board of India (Sebi) has drawn up plans to regulate investment advisers. The market regulator’s draft proposals include mandatory recognition from a self-regulatory organization (SROs) for an adviser to operate and Faaida has already sought Sebi’s approval to become an SRO. Faaida—which translates into “gain" in Hindi—claims to have reached out to some 5,000 IFAs through email. Most of its members are sub-brokers in stock markets, and advisers of mutual funds and insurance policies. Faaida charges a one-time membership fee of Rs5,000 and an annual fee of Rs500. It plans to conduct training programmes and investment seminars where fund managers and other market experts will engage in discussions with IFAs. The members can get access to the latest news on financial markets through its website,, which also enables them to manage data on their clients and generate portfolio statements, etc. “The website will be an enabler as it will help members (IFAs) in maintaining the portfolio of their clients on a regular basis," says Devang Sonawane, a 31-year-old tax consultant and adviser in Mumbai.

A common platform

Hasan Wangde, vice-chairman of the association, says Faaida will help IFAs to be heard. “As an individual, it’s difficult to present our case in times of dispute with mutual fund and insurance companies. Therefore, when Sebi’s draft regulations said that advisers will be allowed to operate only if they get certification from an SRO, we thought of bringing together individual advisers on a common platform." Says Gaurav Mashruwala, a Mumbai-based financial planner: “I come across so many IFAs, who don’t have a business plan in place. They get stuck when it comes to securing new clients and in handling the administrative and back-end work for clients. Most of them are not even exposed to the concept of financial advisory."

Associations such as Faaida can bridge this gap by guiding IFAs on how to practice the profession efficiently, says Mashruwala, a certified financial planner (CFP) from the Financial Planning Services Board or FPSB, another representative body. FPSB, whose members include banks, mutual fund firms and insurance companies, has also applied for the status of a self-regulatory organization. Its CFP programmes are globally recognized.

Not all IFAs have the capacity to enrol in a CFP programme, says a Faaida member, as it can cost anywhere between Rs20,000 and Rs1 lakh. Faaida doesn’t offer a comparable course currently, but plans to conduct its own examinations and may enter into an arrangement with FPSB to offer courses at a discount to IFAs.

However, experts say it’s too early to predict whether Faaida’s efforts will be successful. “If done in the right way, they can make a substantial difference in the way things are done. However, it needs to be seen if associations such as Faaida are successful in influencing the regulatory authorities about what they plan to achieve. It’s too early to say if they can bring about a tangible difference in the way investment advice is given in the country," says Kartik Jhaveri, director of Transcend Consulting (I) Pvt. Ltd, a Mumbai-based financial advisory firm.

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